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Tax(i)ing the poor? Commuting costs in South Africa

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  • Andrew Kerr

    (DataFirst and SALDRU, University of Cape Town)

Abstract

In this paper I describe the monetary and time costs of commuting to work in South Africa. I find that these costs are high and that monetary costs of commuting have increased faster than inflation, mainly through a shift away from walking and towards minibus taxis and driving. Journey times are substantially higher than the OECD country average. Using a method suggested by Hausmann (2013) I estimate the effective tax on hourly earnings that the time and monetary costs of commuting impose. I find high effective tax rates, which are a disincentive to working far from home. This only deepens the puzzle of why South Africa's informal sector is so small, since more than half of the informally self-employed work at home and pay no transport costs. I show that whilst minibus taxis conveyed around 71% of commuters that used public transport in 2013, the industry receives less than 1% of the direct public transport subsidy provided by the South African government. I find that the subsidy accrues mainly to bus and train users in the lower middle part of the labour income distribution.

Suggested Citation

  • Andrew Kerr, 2015. "Tax(i)ing the poor? Commuting costs in South Africa," SALDRU Working Papers 156, Southern Africa Labour and Development Research Unit, University of Cape Town.
    • Handle: RePEc:ldr:wpaper:156
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    Cited by:

    1. Tiaan MEIRING & Catherine KANNEMEYER & Elnari POTGIETER, 2018. "The Gap Between Rich and Poor: South African Society’s Biggest Divide Depends on Where You Think You Fit In," Working Paper ffd19ae8-4b12-4b82-b218-8, Agence française de développement.
    2. Picarelli, Nathalie, 2019. "There Is No Free House," Journal of Urban Economics, Elsevier, vol. 111(C), pages 35-52.
    3. Laurel Wheeler & Robert Garlick & Eric Johnson & Patrick Shaw & Marissa Gargano, 2022. "LinkedIn(to) Job Opportunities: Experimental Evidence from Job Readiness Training," American Economic Journal: Applied Economics, American Economic Association, vol. 14(2), pages 101-125, April.
    4. Henseler, Martin & Maisonnave, Helene, 2018. "Low world oil prices: A chance to reform fuel subsidies and promote public transport? A case study for South Africa," Transportation Research Part A: Policy and Practice, Elsevier, vol. 108(C), pages 45-62.
    5. Martin Abel, 2017. "Labor market discrimination and sorting: Evidence from South Africa," SALDRU Working Papers 205, Southern Africa Labour and Development Research Unit, University of Cape Town.
    6. Jacomien van der Merwe & Stephan Krygsman, 2020. "The relationship between transport accessibility and employment duration," WIDER Working Paper Series wp-2020-56, World Institute for Development Economic Research (UNU-WIDER).

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    Keywords

    Commuting costs; Minibus taxis; South Africa;
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